The Supreme Court overturns Quill

I'm glad about the Supreme Court decision in South Dakota v. Wayfair, allowing states to require Internet retailers to collect sales taxes. Indeed, I was among the tax law professors who signed the Daniel Hemel-penned amicus brief urging this result. The ostensibly constitutionally mandated effective tax preference for out-of-state retailers was distortionary and lacking in any good rationale given the ease of collecting sales taxes via modern technology.

One could see the Quill/Wayfair issue as helping to illustrate my old point that tax cuts or tax preferences can make government effectively "bigger" even if they reduce tax revenues, and thus that their elimination may effectively make the government "smaller." At least when we are talking about fiscal matters - let's leave aside for now, say, the issues around government agents who put children in cages - a meaningful, rather than formalistic, view of the "size of government" should be based on its distributional and allocative effects, relative to some baseline. (Although the choice of baseline is admittedly a vexed issue.) Thus, suppose that in Case 1 the government "taxed" $X from you on Day 1 and gave the same amount back to you (as "spending) on Day 2.  Versus, in Case 2, it took half as much from you on Day 1 but either gave it to someone else or spent it on subsidies for the coal industry. I'd say the government is "bigger" in Case 2 than Case 1, even though the formal measures of "taxes" and "spending" are lower.

Giving Internet sales an effective exemption from state sales taxes, against the background of general under-collection of use taxes, could be viewed in tax expenditure terms as analogous to taxing all sales and then giving the money back to Internet sellers as a special outlay on their behalf. The fact that the effective exemption arguably wasn't intended as a subsidy is immaterial if the question we are asking is simply what level of distortionary economic effects result from state sales taxes. These effects may now be lower, and if the states want to have the same net revenue as before they can do so by lowering their rates. If they choose increased revenues, this might conceivably lead to "larger government" in some dimensions, but there would still be an offset by reason of the greater neutrality as between retailers.

Back in the USA

Yesterday we got back to NYC after spending just over a week in Vienna and Czechia (Prague and Cesky Krumlow). These days it's nice to be away, especially in cities that have beautiful architecture and well-functioning transit systems (if less varied food than NYC), not to mention that being abroad permits one to take a step back from the constant blaring of horrible US political news. I really quite like being in Europe, even if inevitably less at home there than in my native country.

It was vacation, except for a talk at Vienna University on my forthcoming international tax paper, at which I learned that, since in a sense it's two papers (international tax policy lessons of recent years, plus analyzing 3 key provisions in the 2017 act), neither of which is wholly uncomplicated, it's basically impossible for me to present the whole paper unless I have at least 45 minutes. I did indeed have that much time on this particular occasion. But the next few times I present it, I'll probably have only 20 minutes, so it appears that I'll need to jettison one half or the other almost entirely.

Slides for the talk are available here.

Overheard on the street ...

... between two parents who were walking their kids to PS 41 in Greenwich Village (probably for day camp, rather than school):

"So, what did you guys do for Father's Day?"

"We went to Central Park. No meltdowns, it was relatively seamless, couldn't have been better!"

Forthcoming talk in Vienna

I've been quiet here lately because it's the summer, both at NYU and in tax policy circles (albeit, not so much in terms of our actual weather here in the northeastern U.S.).

Since finishing my article on the international provisions in the 2017 tax act (forthcoming in Tax Notes on July 2 and 9), I've mainly been working on my book on literature and high-end inequality. I'm getting towards the finish line for what I see as volume 1, which ends before World War I with literature from the First Gilded Age in the U.S.

But I am heading across the Great Pond tomorrow to spend a week-plus in Vienna, Prague, and Cresky Krumlov (a small and apparently beautiful city in Czechia that is reachable from Prague). The work-related tie-in for this is that on Monday, June 11, I'll be discussing my international tax paper at a Vienna University Tax Seminar.

Slides for the talk are available here.